CFE-Law ACFE Certified Fraud Examiner (CFE) - Law Free Practice Exam Questions (2026 Updated)

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to common law, the question asks about the core concepts in this area.

The correct answer is B: False.

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to common law, the question asks about MOST ACCURATE, the litigation privilege in common law jurisdictions.

The correct answer is A: The primary purpose of the litigation privilege is to protect confidential communications between a client and the client ' s legal representative.

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

This question tests your knowledge of Uncategorized.

the question asks about the core concepts in this area.

The correct answer is C: Structuring.

This question tests your understanding of key fraud examination concepts and legal principles.

The correct answer is D. The CFE Manual states that a person can be qualified as an expert based on special training or experience. It also explains that there is no standard educational requirement for expert testimony and that even a witness with no formal education may still be qualified if the witness has sufficient training or experience in the relevant field.

This is why option A is incorrect: educational accomplishments can help, but they are not the primary or exclusive basis for qualification. Option B is also incorrect because expert qualification is determined by the judge, not by unanimous party approval. Option C is inaccurate because the Manual specifically lists licensing or certification as one of the factors that may be considered in deciding whether a witness is qualified, even though certification alone is not required.

In adversarial jurisdictions, the central question is whether the proposed expert has enough relevant knowledge to assist the trier of fact on the issue in dispute. Because the Manual expressly says an expert may be qualified through special training or experience, D is the most accurate statement.

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to criminal, the question asks about the core concepts in this area.

The correct answer is B: As part of her sentence for bribery a defendant is ordered to transfer a car she received as a bribe to the government.

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

This question tests your knowledge of Domain 7.

In the context of Individual Rights During Examinations, specifically relating to employee, the question asks about the core concepts in this area.

The correct answer is A: Fidelity.

This question relates to individual rights during examinations. The correct answer accurately describes the legal protections, obligations, or privacy considerations that apply in workplace investigations. Fraud examiners must balance investigative needs with legal protections for individuals.

This question tests your knowledge of Domain 3.

In the context of Bankruptcy Fraud, specifically relating to bankruptcy, bustout, the question asks about CEO, MOST LIKELY.

The correct answer is D: A concealed transfer.

This question focuses on bankruptcy fraud concepts. The correct answer correctly identifies the relevant bankruptcy process, filing type, or fraud scheme. Understanding bankruptcy proceedings and the roles of various parties is essential for fraud examiners investigating these cases.

This question tests your knowledge of Domain 1.

In the context of Overview of the Legal System, specifically relating to criminal, civil, common law, the question asks about MOST ACCURATE, civil trials in common law jurisdictions is MOST ACCURATE.

The correct answer is C: Jury verdicts m civil trials must always be unanimous.

This question relates to the legal system framework. Understanding the distinction between different legal systems and processes is crucial for fraud examiners. The correct answer accurately describes the relationship between different legal entities and their jurisdictions.

Under the ACFE Fraud Examiners Manual, Law Section, specifically in The Law Related to Fraud and International Initiatives Against Fraud and Corruption , the OECD Recommendation on Combating Bribery of Foreign Public Officials in International Business Transactions emphasizes strengthening the legal infrastructure of member states.

The Recommendation calls on countries to adopt and enforce effective criminal laws that prohibit the bribery of foreign public officials. It also encourages the enhancement of civil, commercial, and administrative frameworks to support enforcement. This includes corporate liability provisions, adequate sanctions, proper accounting and auditing standards, whistleblower protections, and mechanisms for international cooperation. The goal is to ensure that bribery is clearly defined as a criminal offense and that enforcement mechanisms are robust, coordinated, and effective.

The focus is not on data protection, e-commerce regulations, or general public health and safety laws. Instead, it centers on harmonizing and strengthening anti-bribery statutes and related legal systems to ensure transparency, accountability, and deterrence in international business transactions.

Therefore, the primary area member states are encouraged to improve is their criminal, civil, commercial, and administrative laws, making option B the correct answer.

According to the ACFE Fraud Examiners Manual, Law Section, particularly under The Criminal Justice System and Sentencing , probation is a sentencing alternative in which a convicted offender’s incarceration is suspended, and the individual is allowed to remain in the community under specified conditions. If the offender complies with the conditions—such as maintaining good behavior, reporting to a probation officer, or paying restitution—the individual may avoid serving the custodial sentence.

In this scenario, Paul has already been convicted of embezzlement. The court has imposed a sentence but suspended its execution contingent upon his promise of good behavior. This arrangement is characteristic of probation. The conviction remains in place, but incarceration is conditionally withheld. If Paul violates the terms, the court may revoke probation and require him to serve the original sentence.

A deferred prosecution agreement occurs before conviction and typically involves postponing prosecution in exchange for compliance with certain conditions. Determinate and indeterminate sentences refer to the structure or length of imprisonment, not to suspension of incarceration.

Therefore, Paul’s sentence is best described as probation.

This question tests your knowledge of Domain 8.

In the context of Criminal Prosecutions, specifically relating to deferred prosecution, the question asks about the core concepts in this area.

The correct answer is A: To help reduce the risk of future illegal practices by an organization accused of misconduct..

This question addresses criminal prosecution concepts. The correct answer correctly identifies aspects of criminal proceedings, burdens of proof, or sentencing options. Understanding the criminal justice process is essential for fraud examiners working with law enforcement.

This question tests your knowledge of Domain 7.

In the context of Individual Rights During Examinations, specifically relating to employee, privacy, surveillance, workplace, the question asks about MOST LIKELY.

The correct answer is A: A backpack brought from home.

This question relates to individual rights during examinations. The correct answer accurately describes the legal protections, obligations, or privacy considerations that apply in workplace investigations. Fraud examiners must balance investigative needs with legal protections for individuals.

This question tests your knowledge of Domain 10.

In the context of Basic Principles of Evidence, specifically relating to privilege, the question asks about MOST ACCURATE.

The correct answer is B: The privilege might have been waived because Katrina transmitted the protected information to a third party who has no need to know the information..

This question tests knowledge of evidence principles. The correct answer correctly distinguishes between types of evidence, admissibility requirements, or evidentiary privileges. Proper handling of evidence is crucial for successful fraud investigations and prosecutions.

The correct answer is A. In common law systems, authentication is the process of showing that an item of evidence is what the proponent claims it is. Federal Rule of Evidence 901 states that to satisfy the authentication requirement, the party offering the evidence must produce enough proof to support a finding that the item is what that party claims. This is the core purpose of authentication.

Option B is incorrect because records, including many digital records, can often be authenticated through testimony or certification from a person with knowledge, such as a custodian of records, depending on the applicable rule and context. Option C is wrong because authentication is not something that must be “reviewed and voted on” by a jury as a prerequisite; it is an evidentiary foundation issue generally handled by the court. Option D is also incorrect because even properly authenticated evidence must still be relevant to be admissible. Authentication and relevance are separate requirements, and satisfying one does not eliminate the need for the other. For CFE purposes, the essential idea is that authentication establishes genuineness and identity, so A is the correct answer.

The correct answer is C. In most inquisitorial jurisdictions, expert witnesses are often appointed or closely supervised by the court, and the judge typically has a central role in defining the expert’s mission, the materials the expert may review, and the issues to be addressed. Even so, the parties are usually allowed to challenge the expert in meaningful ways, including raising concerns about the expert’s bias, neutrality, qualifications, methodology, or conclusions. That makes C the most accurate statement.

Option A is incorrect because, in inquisitorial systems, the parties do not ordinarily control the scope of the expert’s authority in the same way they often do in adversarial systems; the judge commonly exercises that control. Option B is too absolute because although the judge plays the dominant role, it is not generally true that only the judge may question the expert’s analysis. Option D is also inaccurate because the ultimate decision about the weight to assign to expert testimony is generally for the judge, not jointly for the judge and the parties.

Thus, the best statement is that the parties are usually permitted to raise objections concerning the expert’s possible biases, making C the correct choice.

According to the ACFE Fraud Examiners Manual, Law Section, particularly in the Money Laundering chapter discussing International Anti-Money Laundering Efforts and the FATF Recommendations , financial institutions are required to file suspicious transaction reports STRs when they suspect that funds are the proceeds of criminal activity or are related to money laundering or terrorist financing.

The conduct described—purchasing bearer instruments with cash in amounts just below mandatory reporting thresholds—is commonly known as structuring. Structuring is a recognized money laundering technique designed to evade currency transaction reporting requirements. Under the FATF Recommendations, financial institutions must not rely solely on monetary thresholds to trigger reporting obligations. Instead, they are required to file a suspicious transaction report whenever there is reasonable suspicion of illicit activity, regardless of the amount involved.

A cash transaction report is typically triggered by transactions exceeding a specific monetary threshold, but structuring to avoid that threshold does not eliminate the reporting obligation. If employees suspect money laundering, the bank is obligated to file a suspicious transaction report with the appropriate authorities.

Therefore, the correct answer is that the bank is required to file a report of suspicious transactions because the employees suspect money laundering violations.

This question tests your knowledge of Domain 2.

In the context of The Law Related to Fraud, specifically relating to bribery, the question asks about the core concepts in this area.

The correct answer is B: False.

This question addresses fraud-related laws. The correct answer identifies the proper legal concept or violation that applies in the described scenario. Fraud examiners must understand these legal principles to properly identify and address fraudulent activities.

The correct answer is B. The CFE Manual explains that although legal professional privilege generally applies to confidential communications between a lawyer and the client, in most jurisdictions the protection extends to communications with third-party consultants hired to help provide legal advice, including fraud examiners, accountants, bankers, and other experts. Therefore, when an attorney shares privileged material with a fraud examiner who has been retained to assist in the case, that disclosure does not automatically waive the privilege.

Option A is incomplete and therefore not the most accurate. While the client does hold the privilege, the Manual also states that the privilege can be waived by the client’s attorney or a third party in some circumstances. Option C is incorrect because not every disclosure to a third party causes waiver; disclosure to a consultant working within the legal team may remain protected. Option D is also incorrect because the use of email itself does not create waiver. The more important question is whether the communication remained within the privileged relationship and was shared only with those assisting counsel. Since the fraud examiner was hired to work on the case, B is the most accurate answer.

This question tests your knowledge of Domain 5.

In the context of Money Laundering, specifically relating to FATF, the question asks about large cash transactions with customers as provided by the Financial Action Task Force (FATF) Recommendations, which of the following transactions would require a report to be filed with the government, FATF.

The correct answer is C: A single cash purchase of casino credits for a sum that is above the jurisdiction ' s designated threshold..

This question addresses money laundering concepts. The correct answer correctly identifies the stage, method, or regulatory framework related to money laundering or anti-money laundering efforts. Understanding these processes is critical for fraud examiners working to detect and prevent financial crimes.